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There was no surprise in Tuesday's cash rate drop, with analysts and commentators united in forecasting a cut was almost certain in the current economic climate.
The 25 basis point cut follows one of the same size in February, the first drop in the cash rate in more than four years following 13 rate hikes between May 2022 and November 2023.
But what goes up generally goes down - borrowers just had to hold on in the meantime.
In April, markets were pricing in a 50 point rate cut in May amid fears US trade tariffs could plunge the global economy into recession.
Although those fears have since eased, the Reserve Bank's monetary policy board acknowledged uncertainty in the world economy has increased over the past three months.
May rate cut always odds-on
On the domestic front, much of the latest economic data supported the case for a rate cut - a "concensus decision" of the board, according to RBA governor Michele Bullock.
Underlying inflation had finally fallen to within the RBA's target band while wage growth was in line with the RBA's forecast.
The only sticking point was last week's robust jobs figures showing another 89,000 people found work in April with a near-record 67.1% of the working-age population employed or looking for a job.
In the Statement of Monetary Policy accompanying the decision, the board noted labour market conditions remained tight although productivity growth has not picked up.
The statement noted growth in household consumption is expected to continue to increase as real incomes rise, although recent date suggested the pick-up will be a little slower than was expected three months ago.
Outlook remains uncertain
The RBA board acknowledged global uncertainty surrounding tariffs as well as geopolitical uncertainty "remain pronounced".
"These developments are expected to have an adverse effect on global economic activity, particularly if households and firms delay expenditure," the statement said.
"This has contributed to a weaker outlook for growth, employment, and inflation in Australia."
But the statement said world trade policy is also changing rapidly, making central bank forecasts subject to considerable uncertainty.
Inflation tamed
The good news is the board has judged the risks to inflation have become more balanced with upside risks appearing to have diminished.
It was this that prompted the board to ease monetary policy although the statement warned (as usual), it would remain cautious about the outlook.
In its meeting, it was revealed the board considered a downside scenario and noted monetary policy is well placed to respond decisively to international developments.
The statement reiterated the board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
Which was the first bank to cut home loan rates?
Immediately following the decision, National Australia Bank announced it will pass on the full 25-basis point rate cut to its home loan customers, effective Friday 30 May.
The bank said this would mean a borrower with a 30-year mortgage of $550,000 would save $83,000 in interest over the life of the loan, paying it off two years earlier if they kept their repayments the same.
Other financial institutions will issue their responses over the ensuing days.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Row Tags | Features | Link | Compare | Promoted Product | Disclosure |
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| Promoted | Disclosure | |||||||||||
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| Promoted | Disclosure | |||||||||||
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| Disclosure | ||||||||||||
5.89% p.a. | 5.93% p.a. | $2,962 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure |
Image by Jacek Dylag via Unsplash
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